Following the example of Baltimore, who earlier this week unveiled a lawsuit against Wells Fargo for targeting minorities with high-cost subprime loans, the mayor of Cleveland has sued 21 different banks over their subprime lending practices. From the Plain Dealer, who first broke the story:
The one-of-a-kind suit, filed in Cuyahoga County Common Pleas Court, accuses venerable institutions such as Deutsche Bank, Goldman Sachs, Merrill Lynch and Wells Fargo of creating a public nuisance. [Cleveland Major Frank] Jackson contends the companies irresponsibly bought and sold high-interest home loans. The result: widespread defaults that depleted the city’s tax base and left entire neighborhoods in ruins.
Click here to see a graphic of all of the banks named in the suit. Cleveland’s suit differs from Baltimore’s in that it names investment banks that traded securities backed by subprime loans, as well as making creative use of the city’s “public nuisance” statutes. Talk about biting the hand the fed you — I didn’t see anyone complaining so long as the tax base was getting fatter. Now lenders have become a “public nuisance?” Part of me hopes that Jackson gets everything he’s asking for. I’d be curious to see what becomes of Cleveland when nobody will lend there. (Hat tip: Tanta)
